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General Electric's Coal Plant Profiteering (PDF) SEPTEMBER 2019 IB: 19-09-B ISSUE BRIEF GENERAL ELECTRIC’S COAL PLANT PROFITEERING Despite calling itself a leader in decarbonization, GE is, in fact, doubling down on the dirty energy of the past by profiteering from the construction of at least a dozen new coal plants around the world and actively lobbying governments to expand the use of coal. These coal plants will lock in decades of fossil fuel dependence and dangerous health and climate impacts—including premature deaths from coal plant pollution. The IPCC report on 1.5°C requires a 70 percent reduction in global coal generation by 2030 and a complete coal phase- out by 2050—making GE’s fossil expansion completely incompatible with climate needs. GE should immediately end its involvement in new coal projects and position itself to benefit from the energy transition by growing its portfolio in clean energy technology, such as wind turbines and battery storage. GE’s involvement in coal includes projects that would be permanently unprofitable without subsidies, involve a Russian partner subject to U.S. sanctions, violate E.U. pollution control standards or aid rules, are suspected of filing false environmental impact assessments, or are stalled for years due to legal challenges in court. GE should cancel its involvement in these projects, beginning with the ones in Kenya, Kosovo, Bosnia, and Vietnam. As world leaders prepare to convene for the U.N. Climate world with a total capacity of more than 12,000 megawatts Action Summit in September, expectations are high for (MW) (Table 1). Many of these plants are expected to be global leaders to ramp up their ambition on climate change. so polluting or uneconomical that they could not be built Governments, civil society organizations, and the private in the United States. Instead, GE is trying to promote its sector are being asked to step up their commitments to outdated technology abroad. The construction of these achieve a global transition from fossil fuels to a more coal plants will lock in decades of fossil fuel dependence energy-efficient world, powered by renewable energy. This and dangerous health and climate impacts in areas already energy transformation will require not only policy direction highly vulnerable to climate change. from governments but also innovation by private companies. Four particularly alarming projects involving GE are One major company, the U.S.-based giant General Electric currently under consideration by developers, regulators, 1 (GE), plays an outsize role in global energy infrastructure. and financiers: But so far, GE’s actions threaten to hurt climate progress more than they help. n the first-ever coal plant in East Africa, to be located next to a UNESCO World Heritage site in Lamu, Kenya Despite calling itself a leader in “the future of energy” through decarbonization and touting the performance n a coal plant in Kosovo from which the World Bank of its wind turbines, GE is, in fact, doubling down on the withdrew its financing after determining that renewable dirty energy of the past.2 Even now, GE is helping to build energy would be more affordable or plan more than a dozen new coal plants around the AUTHORS: www.nrdc.org Han Chen www.facebook.com/nrdc.org Claire Wang www.twitter.com/NRDC n a coal plant in Bosnia and Herzegovina that does not recently opened a new offshore wind turbine factory and comply with European Union finance standards and development center in China.13 GE’s CEO expects renewable violates the union’s pollution control rules power to be the fastest-growing business for the company in n a coal plant in Vietnam that has been delayed following 2019.14 the imposition of U.S. sanctions on a Russian project Despite acknowledging its bad fossil investment decisions contractor in the past, GE is continuing to finance coal abroad while GE should immediately end its involvement in these projects keeping the largest share of its renewables investments in and investments in all new coal projects. GE should instead the United States.15 Not only is GE making itself vulnerable position itself to benefit from the energy transition by to further financial losses, it is also endangering the growing its portfolio in clean energy technology, such economic health of countries hosting the coal projects. as wind turbines and battery storage, which are far less Thanks to its status as a well-known U.S. company, GE’s financially risky. involvement in fossil projects can make it easier for these risky coal plants to receive financing to be built. In some places, such as South Africa, GE is even actively lobbying GE’S BAD BETS ON FOSSIL FUELS WILL NOT PAY OFF governments to expand the use of coal.16 In July 2019, GE claims that its involvement in coal is beneficial because GE announced plans to build a coal plant in Mozambique, its coal plant technology is “cleaner” than that of other though the deal is at an early stage and GE can exit the deal 3 power suppliers. But this technology, even though at any time.17 newer, still generates significant pollution and carbon emissions.4 According to the Intergovernmental Panel on By contrast, GE announced in June 2019 that it would Climate Change’s landmark report on achieving the Paris demolish a gas-fired power plant in California after only 18 Agreement’s emissions-reduction targets, limiting global one-third of its useful life because it was uneconomic. warming to 1.5°C requires a 70 percent reduction in global Wind and solar generation in California have become far coal generation by 2030 and a complete coal phase-out by more cost-competitive solutions. GE’s turbine technology— 2050.5 This means not only that the existing stock of coal hailed as state-of-the-art a decade ago—could not operate plants must be gradually taken offline, but also that no new with the fast start-up times needed to come online when coal plants should be built. The average life span of a coal there is less wind and solar generation (which are lower- 19 plant is 40 to 50 years, so new plants would exceed the 2050 cost power sources). GE’s gas plant took hours to start, deadline.6 which should be a red flag against building coal plants, which are much slower to start up than most gas plants. GE’s own official statement on climate change claims that Thus, coal plants are not well-designed for a decarbonizing the company is “uniquely positioned” to achieve the Paris world that is projected to rely more and more on renewable targets and “enable the ultimate transformation to a carbon- energy projects in the future.20 The GE gas plant site was 7 free energy economy.” Yet the same document advocates sold to a battery storage developer. for energy approaches that are decidedly not carbon-free, including building new coal and gas power plants. New research this summer found that all currently existing fossil THE DANGERS AND BAD ECONOMICS OF COAL PLANTS fuel infrastructure, if operated as usual, would emit enough The threats that coal plants pose to economic stability and carbon to put the 1.5 °C Paris goal out of reach—making public health are well documented, and GE’s coal plants GE’s fossil expansion completely incompatible with climate are no different.21 Many of these projects involving GE have needs.8 GE’s own reports have for years warned of the risks highly questionable payoffs and major social harms. For of climate inaction, and after the United States announced example, the Punta Catalina plant under construction in its withdrawal from the Paris Agreement, GE’s then-CEO, the Dominican Republic was linked to a $131 million (USD) Jeff Immelt, tweeted that “industry must now lead” on corruption scandal by construction company Odebrecht.22 climate change.9 GE’s two plants in Vietnam, Long Phu 1 and Vung Ang 2, were approved despite insufficient or incomplete G.E. has been burned by its own fossil investments environmental and social impact assessments that before. Between 2016 and 2018, the company lost $193 underestimated pollution or failed to consult communities billion—74 percent of its market value—in part due to its affected by the projects.23 The Ostroleka C plant in Poland overinvestment in fossil energy.10 GE made a disastrous play will be powered by lignite, the most polluting form of and did not properly calculate that demand for coal and gas coal.24 It has a projected net present value of negative €1.7 turbines worldwide would plummet. GE is certainly aware billion ($1.9 billion USD), meaning it will be “permanently of its mistake; its 2018 annual report lamented its losses unprofitable,” as one analysis put it, and that Polish in its coal and gas operations and pointed to “increasing taxpayers are subsidizing an expensive power plant that energy efficiency and renewable energy penetration” as should not have been built.25 a reason for its terrible returns on the fossil fuels side.11 Indeed, in 2018, while GE’s coal and gas division revenues Although some of GE’s coal projects have already begun shrank by 22 percent, its revenue from renewables construction, there is still time for the company to end its (mostly wind) grew by 4 percent.12 GE has been promoting involvement. We now discuss particularly notable projects its wind turbines as a “cutting-edge” technology, and it that GE’s board should reject immediately. Page 2 GENERAL ELECTRIC’S COAL PLANT PROFITEERING NRDC TABLE 1: COAL PLANTS UNDER CONSTRUCTION, PLANNED, OR DELAYED THAT WILL USE GE EQUIPMENT COUNTRY PLANT MW STATUS Bosnia Tuzla 726 450 Planned Bangladesh Mawa 127 660 Delayed Cambodia Sihanoukville Stung
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